The NCLAT's judgement, in this case, has proven to be a watershed moment. Apart from explaining the most significant and pivotal problems in the Binani case, it has also established a precedent for future cases under the Insolvency and Bankruptcy Code, 2016, by underlining the case's key issues. This case established two key principles concerning the matter.
In the instant case titled Binani Industries Vs Bank of Baroda, National Company Law Tribunal, Kolkata Bench, Kolkata the issues raised before the NCLT for clarification were:
Is it possible that RP overstepped his authority by appointing other professionals and outsourcing work?
Is it possible that refusing to consider Ultratech's improved offer is a violation of the IBC's provisions?
Whether RP ignored the complaints of financial creditors?
With regard to the first issue, the Tribunal found that RP's fees for hiring individuals were excessive, and that directed expenditures should be acceptable.
With regard to the second issue, it is illegal since the CoC decided to engage with only the H1 bidder, which is in violation of the code's basic rules aimed at maximising value. The Coc approved Rajputana Properties' plan, which is unjust and arbitrary, and the company was disqualified from the bidding process since it was not an H1 bidder. which isn't true because of the following:
Only H1 Bidders will be negotiated with. This isn't a code test. RP should act independently of the CoC, and his resolution plan should be equitable to all creditor categories.
The goal of RP and CoC should be to maximise value; email receipt should not be used as a rejection criterion.
He has a responsibility to place all plans that meet the requirements of Section 30(2).
Any plan/bid submission must be pursued to its logical conclusion until the CIR process is completed.
With regard to the third issue, the NCLT observed that a reduction in amounts payable to operational creditors is acceptable however such reduction should be acceptable to all classes of creditors since the plan contained settlements. As various classes Of creditors differ, the NCLT observed that the Resolution Plan contravenes some provisions Of the Code as such Regulation is not in line with the Objectives Of the Code.